ECONOMIC PERSPECTIVES FOR PETROLEUM PRODUCTS MARKETING IN A DEVELOPING COUNTRY: POLICIES AND STRATEGIES FOR NIGERIA

Abstract

The international petroleum industry in the last decade can best be described as,volatile and unstable. For countries like Nigeria that are dependent on oil (a non-renewable energy source) this portends grave economic and social consequences if the trend continues. Increase in the purchasing power as well as the substantial population explosion coupled with the growth of the domestic economy has resulted in high consumption of petroleum products. Local consumption of the crude oil equivalent has become significant when compared to the country's OPEC production quota - a disturbing development when viewed against a backdrop of government pricing policy.

Great emphasis has been placed on the upstream end of the industry considering its revenue implications for the country. Marketing of petroleum products was therefore left largely to ad-hoc planning with a. central focus of meeting domestic demand. Consequently the inter-play between supply, demand and distribution has resulted in accute shortages of petroleum products - ironical for a major petroleum exporting country.

This study will seek to initiate policies and strategies governing petroleum products marketing with a view to assigning developmental roles to the oil marketing companies. Reduction in consumption by optimising product mix and conditional substitution of alternative energy sources will form part of the framework.

The focus of the study will be on review of production, pricing and distribution policies of NNPC, the marketing companies, the Petroleum Inspectorate and the consumers of petroleum products. Petroleum products for the purpose of this study will be limited to those whose consumption is substantial and for which there are infrastructural facilities (available or proposed) to produce locally.

Literature on the subject are restrictive to pronouncements and proposals made in various memoranda and submissions of major players in the industry. Research methodology will involve obtaining these materials, as well as interviewing experts who are experienced and knowledgeable in the subject with a view to developing an acceptable and reasonably practical policy and strategy model.